Final Accounts Test 29

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Final Accounts Test 29

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Weekly Quiz Competition

Question 1
1 / -0

Sequence of effect on debtors is ____________.

A
Bad Debts--Provision for Discount on Debtors--Provision for Doubtful Debts

B
Bad Debts--Provision for Doubtful Debts--Provision for Discount on Debtors

C
Provision for Discount on Debtors--Provision for Doubtful Debts--Bad Debts

D
All of the above

Solution

Bad debts and provision for bad debts are loss for the business and this should be debited to the profit & loss account.

Discount on debtors is also a loss to the business. Discount is allowed to the customer either by virtue of business requirement or some time due to written off of small amounts.

The sequence for putting all such expenses/loss in profit & loss account is as under:

Bad debts
Add: Provision for Doubtful debts
Add: Provision for Discount on Debtors

All above are actual losses or anticipated losses and should be debited to profit & loss account of the business to arrive the true profitability.
Question 2
1 / -0

The percentage of the commission is applied on the profit either:
1. Before charging such commission
2. After charging such commission.

A
1 is true

B
2 is true

C
Both are true

D
Both are false

Solution

The manager of the business is sometimes given the commission on the net profit of the company. The percentage of the commission is applied on the profit either before charging such commission or after charging such commission. In the absence of any such information, it is assumed that the commission is allowed as a percentage of the net profit before charging such commission.
Question 3
1 / -0

Stock of Rs.4,000 is destroyed by fire, It was not insured, The accounting entry is ________________.

A
Stock A/c Dr. 4,000 Trading A/c Cr. 4,000

B
P and L A/c Dr. 4,000 Trading A/c Cr. 4,000

C
Stock A/c Dr. 4,000 P/L A/c Cr. 4,000

D
Trading A/c Dr. 4,000 Stock A/c Cr. 4,000

Solution

Stock is an item of trading account, hence in case of loss of stock, stock need to be reduced. Hence the loss of stock due to fire which was not insured is a complete loss to the business.

Following accounting entry will be passed:

Profit & Loss A/c Dr. 4000
To Trading A/c 4000
Question 4
1 / -0

From the following details calculate Net Purchases of Universal Ltd.
Opening stock =50,000
Manufacturing expenses = 30,000
Selling and distribution expenses =Rs. 20,000
Administrative expenses =Rs. 10,000
Financial expenses =Rs. 5,000
Closing stock Rs. 25,000
Sales Rs. 2,40,00
Gross profit on sale 25 %

A
Rs. 1,20,000

B
Rs. 95,000

C
Rs. 1,25,000

D
Rs. 85,000

Solution

Solution to the given problem is as under:

Trading Account
Particuars Amount Particulars Amount

To Opening Stock 50000 By Sales 240000
To Manufacturing Exp 30000 By Closing Stock 25000
To Purchases (Balancing) 125000
To Gross Profit 60000
(25% of Sales)
---------------- ----------------
265000 265000
------------------ --------------
Question 5
1 / -0

XY Associates Trial balance as on 31-3-2013 shows the balance of Sales A/c as Rs. 1,85,000. While checking the books of account the following discrepancies were noticed.
(a) A sales of Rs.2,560 was recorded in the sales day book as Rs,650
(b) Total of sales day book for the month of May 2012 was short by Rs.2,000.
(c) Sales includes sales proceed of dead stock sold Rs.6,000
From the above details, calculate the actual sales to be shown in Trading A/c .

A
Rs.1,80,000

B
Rs.1,82,910

C
Rs.1,79,290

D
Rs.1,81,690

Solution

Solution to the given issues is as under:

Balance of Sales Account Rs.185000
Add: Short sales recorded (Rs.2560 - Rs.650) Rs. 1910
Add: Total of Sales day book short in May Rs. 2000
--------------------
Rs.188910
Less: Sales proceed of dead stock Rs. 6000
--------------------
Sales to be shown in Trading Account Rs.182910
-------------------
Question 6
1 / -0

Producers inventories like livestock, agricultural and forest products, mineral oils, ores and gases are valued at__________.

A
cost price

B
least of cost and market price

C
net realizable value

D
market value

Solution

Normally, the valuation of inventory is done on the basis of cost or market/ net realizable value whichever is lower. In case of manufacturers inventory would be at its cost to produce the item, however, if the net realizable value of such inventory is less than the cost, the net realizable value will be shown as inventory value in balance sheet.

There is not process of finding out the actual cost of live stocks, agricultural and forest products, hence the valuation of inventory is done on the basis of net realizable value.
Question 7
1 / -0

From the following details calculate the missing figure.
Purchases = ______
Manufacturing expenses = Rs. 40,000
Direct expenses = Rs. 20,000
Selling and distribution expenses = Rs. 23,000
Administrative expenses = Rs. 12,000
Sales Rs. 2,80,000
GP 25% on sales

A
Rs.1,35,000

B
Rs. 1,50,000

C
Rs. 1,45,000

D
Rs. 1,65,000

Solution

Solution to the given situation is as under:

Trading Account
Particulars Amount Particulars Amount
To Purchases (balancing) 150000 By Sales 280000
To Manufacturing Expenses 40000
To Direct Expenses 20000
To Gross Profit 70000
(25% on sales)
------------------ ---------------
280000 280000
-------------------- --------------
Question 8
1 / -0

From the following details,_______will be charged to profit and loss A/c as bad debts during the current year.
Provisions for bad debts A/c at the beginning of the year Rs.24,000
Actual bad debts during the year Rs.20,000
Closing balance of Debtors. Rs.80,000
Provision for bad debts to be made @5% of total debtors.

A
Nil

B
Rs. 4,250

C
Rs.2,690

D
Rs.3,200
Question 9
1 / -0

From the following details calculated the managerial commission.
Net profit before charging managerial commission Rs.65,000
Managerial commission 11% after charging such commission.

A
Rs.6,441

B
Rs.6,500

C
Rs.6,290

D
Rs.6,360
Question 10
1 / -0

Calculate, sales from the following details :
Opening stock Rs. 4,000
Direct expenses Rs. 5,000
Cost of goods sold Rs. 30,000
Gross profit Rs. 1,500
Closing stock Rs. 2,000.

A
28,000

B
31,000

C
32,000

D
33,500

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Final Accounts Test 29

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Final Accounts Test 29

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Question 1

Bad Debts--Provision for Discount on Debtors--Provision for Doubtful Debts

Bad Debts--Provision for Doubtful Debts--Provision for Discount on Debtors

Provision for Discount on Debtors--Provision for Doubtful Debts--Bad Debts

All of the above

Solution

Question 2

1 is true

2 is true

Both are true

Both are false

Solution

Question 3

Stock A/c Dr. 4,000 Trading A/c Cr. 4,000

P and L A/c Dr. 4,000 Trading A/c Cr. 4,000

Stock A/c Dr. 4,000 P/L A/c Cr. 4,000

Trading A/c Dr. 4,000 Stock A/c Cr. 4,000

Solution

Question 4

Rs. 1,20,000

Rs. 95,000

Rs. 1,25,000

Rs. 85,000

Solution

Question 5

Rs.1,80,000

Rs.1,82,910

Rs.1,79,290

Rs.1,81,690

Solution

Question 6

cost price

least of cost and market price

net realizable value

market value

Solution

Question 7

Rs.1,35,000

Rs. 1,50,000

Rs. 1,45,000

Rs. 1,65,000

Solution

Question 8

Nil

Rs. 4,250

Rs.2,690

Rs.3,200

Question 9

Rs.6,441

Rs.6,500

Rs.6,290

Rs.6,360

Question 10

28,000

31,000

32,000

33,500

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